BEWARE the laid-back Aussie surfwear entrepreneur. He may look like an ageing hippy, but he is probably worth hundreds of millions of pounds.
Doug Spong, 58, is a classic example: with his greying hair swept back in a ponytail and stubble on his chin, Spong enters his gleaming new headquarters on the Gold Coast like an unemployed surfie looking for a job. He wears flip-flops, board shorts and a T-shirt.
Yet this veteran surfer happens to be the wealthy founder and owner of Cult, the latest global surfwear label. In the past four years Spong has built Cult Industries into an operation with sales of hundreds of millions of dollars a year, and outlets in 26 countries. Being a private company, Cult won’t reveal actual figures.
“But last year we grew sales three-and-a-half times,” he said during his lunch hour, which he spends on an exercise bike.
Cult is a minnow. It lags well behind the “Big Three” — Billabong, Quiksilver and Rip Curl — which control 70% of the world market for board shorts, surf shirts, boards and surfing accessories. But Spong’s label is the fastest growing in the surfwear market, although he anticipates slightly slower growth this year.
Last month Spong and his fellow “executives” — all veteran Aussie surfers — took off for a month’s surfing and fishing in the Coral Sea aboard Amnesia, his 110ft converted tugboat.
“We surfed for three to four weeks straight,” Spong said. “We lived on the boat. We had five different ways of communicating with the office. It’s always been our intention to surf as much as we can and try not to wear suits and try not to report to anyone or be particularly responsible.
“The beauty of this thing is that it allows you to do all the things that you want to do, like heli-skiing in Canada or surfing in Timor. We go to places where we can get a wave.
“Who wants to be the richest guy in the graveyard? You can’t have fun when you’re dead, so you may as well do everything you can while you’re here.”
If Spong gives the lie to the image of the stressed-out business executive, the impression of carefree commercial success is well honed. In fact he has been broke twice, and has always worked to an exhausting schedule. However footloose the wrapping, he is clearly a driven man.
Pedalling away in his lunch hour, Spong outlined his vision to build Cult Industries into one of the world’s top five surfwear brands. “We’re a brand,” he said. “We’re an identical business to Billabong. But we’re not a big stable of brands. We’re growing our business by focusing on the young adult market, the 17 to 20-year-olds. The bloke who has got his first car, first girlfriend and first apartment. We also do womenswear. But we don’t do toddlers or young teens. We appeal to the rebel surfer.”
Spong’s personal wealth is estimated in the tens of millions of pounds. Yet becoming one of Queensland’s richest men has been a long, gruelling process. He started in the early 1970s as the owner of Double Dragon Clothing in Bali.
His first brush with bankruptcy occurred when he failed to deliver on a consignment because, he readily admits, he did not organise the production properly.
He then started Rip Curl’s garment division in Torquay, Victoria, home of the famous Bell’s Beach, which boasts one of the world’s largest breaks. Next he worked in India for several years, learning the rudiments of the business.
Again, things fell apart when he made some “classic production mistakes”.
But he salvaged enough to retire, in 1987, at the ripe old age of 38, to Surfers’ Paradise: some give up the day job to play golf; others seek the perfect wave. But the perfect wave proved to have an uncomfortable edge and Spong, forever restless, soon postponed paradise and went back to business.
He then spent 14 years as the licensee of Billabong’s accessories division, building sales of Billabong-branded hats, bags, sunglasses and wetsuits into 40% of the company’s overall turnover.
Six years ago, when Billabong floated, he folded his division back into the company, and was set free — armed with a small fortune and the dream of creating his own label.
Spong sprang into Billabong’s backyard, literally. He bought a tiny optical company called Cult Optics, and established his first office across the road from Billabong’s Gold Coast HQ. He would see his old boss, Gordon Merchant, coming and going, but the two rarely waved or spoke to each other.
Something still smoulders between the two surfwear pioneers that explains why Spong relishes his company being a little thorn in Billabong’s side, which, with annual sales of A$900m (£360m) and 1,000 employees, dwarves Cult.
Merchant, Queensland’s richest man, built Billabong from a little home operation stitching surfwear on his kitchen table in 1973 into today’s biggest surfwear brand (along with Quiksilver).
He is worth about A$700m, and though unruffled by Cult Industries putting its tanks on his lawn, Merchant knows the power of a surfwear brand. So do the founders of Rip Curl, Brian Singer and Doug Warbrick, who started making surfboards in the late 1960s in a garage in Torquay and then expanded into wetsuits. Surfwear has made multimillionaires of Singer and Warbrick.
Spong’s aim is to ease Cult’s name into the subconscious of the surfing world, as though it had been there all along. It’s all a matter of cracking the “psychographic” of a very tribal market, he said.
His “informal” market research is to go surfing in exotic places such as the Maldives and Sumatra and watch the French, Japanese and American surfers.
He noticed they were all wearing the same thing, in similar colours. Surfing style, he concluded, was universal, with no cultural preferences. It made the job of creating a global brand rather easier.
The key to it all, of course, is paring back costs — finding very low overheads to produce a fashionable name that commands a high price. Labour costs are therefore kept to a minimum. All the big surfwear products are manufactured in India, China and Indonesia, using sweatshop labour.
“That’s what it’s all about,” said Spong. “It costs £8.50 an hour here in Australia to put a product in a box; in China it costs just over £2 a day.
“We manufacture in China and India mostly. We have quality-control systems in place; nothing gets past us.”
Spong likens his business day to surfing: “Some days are so exciting, absolutely thrilling; others are the opposite. It’s like a big wave, the ups and downs of this business.”
Whether he gets dumped depends on Cult’s appeal in a tough market. The aim is to build a global brand, which usually takes decades. Billabong, Rip Curl and Quiksilver — all founded in Australia — took 30 years to achieve international recognition.
Yet Spong seems to have done it in four. Cult products are now sold in Asia, America and Europe, via regional headquarters in Biarritz in southwest France and California’s Huntington Beach. The Indonesian, Indian, Taiwanese and other Asian markets are serviced from Australia.
The only market Spong hasn’t yet cracked is Japan, where he cannot find a sales director “who understands us”.
Surfing is safer than retailing, as Spong knows; you can recover from being dumped at sea, but rarely on land.
Many small surfing labels have failed, or been acquired, in recent years. Spong is determined to survive — but that may depend on whether Billabong, Quiksilver and Rip Curl let him.
The three big surfwear labels
QUIKSILVER
BILLABONG
RIP CURL
Founded in Torquay in 1969 by Doug Warbrick and Brian Singer Began producing surfboards in a backyard garage, went into wetsuits in 1970 Still privately owned so no publicly reported sales figures Sells in 70 countries and has 170 employees Sponsors Coolie kid and world No3 Mick Fanning and junior champion Steph Gilmore
